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DRT Judgement

This query is : Resolved 

29 September 2014

In case of Unsecured Personal Loans a recovery certificate is been issued inwhich there is no mention of any property owned by the borrower.This same order is challenged by the borrower in DRAT & it is still pending.However the recovery certificate holder, Asset Reconstruction company has sent a legal notice to the society in which the borrower owns a flat requesting the society not to allow anybody to deal with the same flat in whatsoever manner & humiliated the borrower further by disclosing the loan amount publicly. Can the borrower sue the Asset Reconstruction Company for defamation, mental torture & humiliation? What are the legal remedies available for the borrower to sue the ARC?

Anirudh (Expert)
29 September 2014

Do you mean to say that the communication to the Society is a 'defamation'?

B.B.R.Goud. (Expert)
29 September 2014

Asking for repayment is not at all an offence.....

Rajendra K Goyal Online (Expert)
29 September 2014

Repeated query:


K.K.GangulyOnline (Expert)
30 September 2014

No. It is required by the said Asset Reconstruction Company to inform the society to stall any effort by the borrower to sell of his flat which the said Company wil get attached for selling to recover the dues.

ajay sethiOnline (Expert)
30 September 2014

no case for defamation is made out

Kvijay12345 (Querist)
30 September 2014

First of all let me clear that As the loan was Unsecured Personal Loan,no property of the borrower was mortgaged to the lender. Although the ARC had mentioned in its interim application about the property of the borrower,DRT did not show any interest in it & did not ask the borrower to declare or confirm his assets. Also in its final order the DRT did not mention any property of the borrower nor mentioned any source of the recovery although the recovery certificate is issued.On the contrary the DRT reduced the rate of Interest from 23% to 10% p.a.to be calculated as simple Interest. My point is that (kind attention please Expert Anirudh & Expert B.B.R.Gaud); Asking for repayment is not at all an offence nor the communication to the Society is a 'defamation'. But in such circumstances, how can ARC directly send a notice to the society of the flat owner (Borrower), without any directions from the court & without any rights to the property owned by the borrower,& that is also when the appeal of the borrower is still pending with DRAT?If at all the property is to be attatched & auctioned, there has to be certain procedure to be followed by the ARC.When the appeal of the borrower is still pending with DRAT,How can an ARC & its Representative disclose the loan amount & defame & humiliate the borrower publicly & act against the Banking code of conduct for the recovery agents laid down by RBI ? I think no Recovery agency can act against the code of conduct laid down by RBI (in which it is clearly stated that no recovery agent is allowed to disclose the loan amount or humiliate & defame the borrower publicly).Even if recovery proceedings including attachment of the property are started,the court may ask for the status of the property & the borrower may get a fair chance to defend himself & put his say in the matter about the property owned by him.Then only it would be decided, before that it is illegal to send the notice directly to the society.Hence in this case defaming the borrower is an offence.In addition the borrower can further appeal against such orders in the upper courts i.e. DRAT,HIGHCOURT etc.

K.K.GangulyOnline (Expert)
01 October 2014

1. The Asset Reconstruction Company has stepped in to the shoes of the lending Bank and can act as the lender,

2. The said Company has sent the notice only pending attachment of the nproperty with due process of law i.e. by filing application informing the details of the asset of the defaulting borrower with its valuation to enable the DRT to aution the said property to recover the certificate debt,

3. This is neither defamation nor any arbitrary action.

T. Kalaiselvan, Advocate Online (Expert)
04 October 2014

The further explanation given by expert Mr. Ganguly is fully convincing. Even after this you are not satisfied, you may go ahead with your proposed action.

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